Saturday, June 12, 2010

After more than a half century of careful implementation of the policies away from national sovereignty and toward greater and tighter economic and monetary integration of European countries, and on the verge of finishing the experiment with fiscal and political integration, Europe may be no more than a name for a geographical area after all.

First it was the Greek sovereign debt crisis (it's far from over). Sovereign debt crisis spread quickly to other southern European countries, and now may be starting to threaten the euro core countries like France. French President Nicolas Sarkozy threatened Germany over Greece that France would pull out of euro unless Germany agreed to the rescue package. Increasing number of Germans, who didn't want euro that much to begin with, want their Deutsche Mark back. Greeks are rioting against austerity measures pushed by non-Greeks.

And now, Belgium, a country of 10 million people whose capital, Brussels, is host to pan-European and international organizations (the EU headquarters, NATO, etc.), may decide to break itself up.

"BRUSSELS (AP) - Belgium's 6.5 million Dutch and 4 million French-speakers are locked in an unhappy, quarrelsome union, and voters in a general election Sunday might well favor the prospect of a political divorce down the road.

"A mainstream Flemish party that is expected to do well is invoking the concept of irreconcilable differences to seek a separation and, in time, take the country's Dutch-speaking Flanders region into the European Union as a separate country.

"This is a nightmare scenario for the poorer Wallonia, Belgium's Francophone south, which greatly depends on Flemish funds.

"Early elections were called after Premier Yves Leterme's five-party coalition fell apart April 26 in a dispute over a bilingual voting district.

"That issue has pushed the New Flemish Alliance—a tiny, centrist party only a few years ago—into pole position: it is forecast to win a quarter of the vote in Flanders.

"Its leader—and perhaps Belgium's next premier—Bart de Wever, 39, wants an orderly breakup of Belgium by shifting the national government's last remaining powers, notably justice, health and social security, to Flanders and Wallonia. That would complete 30 years of ever greater self-rule for the two regions.

"...Flanders tends to be conservative and free-trade minded. Wallonia's long-dominant Socialists have a record of corruption and poor governance. Flanders has half the unemployment of Wallonia and a 25 percent higher per-capita income, and Dutch-speakers have long complained that they are subsidizing their Francophone neighbors." [Click on the article title to read the entire article.]

Dutch-speaking Flanders does not want to subsidize French-speaking Wallonia any more. It seems like a microcosm of the EU and euro zone: the industrious and productive north doesn't want to subsidize the south any more.

A tiny German-speaking Community which was part of Prussia before the World War I and which is part of Wallonia is also pushing for more autonomy.

Friday, June 11, 2010

from LRC Blog at Lewrockwell.com. It is not to excuse BP (or Transocean, for that matter), but just to give you some perspective on the spill in numbers. One conclusion from these numbers: Nature is so huge, we are so small. In a way, it is amazing that we even attempt to do something with what surrounds us - be it an ocean or land or air - undaunted.

Estimates of the oil released vary from 40 million to 100 million gallons. Let’s use 66 million gallons to make the arithmetic easy.

The amount of oil released is 1/10,000,000,000 of the volume of the Gulf (one ten billionth).

If it has taken 53 days to release 66 million gallons, it will take 530,000,000,000 days to fill the Gulf of Mexico. That’s 1.8 trillion years.

If the earth is 4.54 billion years old, it would take 400,000 earth ages to fill the Gulf.

If the universe is 13.75 billion years old, it would take 130,000 ages of the universe to fill the Gulf.

Stop! This is not possible. Here’s another view:

Tiber field (on which the platform was drilling) contains 250,000,000 barrels of oil (at 42 gallons per barrel).

At 66 million gallons per 53 day period, it would take 8,400 days to drain Tiber field (23 years).

If emptied, Tiber field would cover the 615,000 square miles of the Gulf surface with 0.00098 (about 1/1000) inch of oil after 23 years.

The point of all this is perspective. We are very small so everything looks big to us. When journalists report massive oil plumes underwater, or foot deep oil collections on shore, we should be aware that things are still very, very small relative to the enormity of the Gulf of Mexico. The plumes may not actually be massive, and the oil may not be 1 foot deep everywhere. None of this is intended to excuse BP—it’s just perspective.

Wednesday, June 9, 2010

As the financial markets wobbles under the weight of debt (sovereign and otherwise, around the world), the tone-deaf US Senate is trying to come up with enough votes to pass a 'jobs bill' to the tune of $100 billion.

The bill is awkwardly titled "The American Jobs and Closing Tax Loopholes Act".

Senate Democrats have come up with a new talking point to push their bill: It will reduce deficit!

(Yeah right. Do they even know how much deficit they've racked up already?)

"The Senate continued to look for ways on Wednesday to muster the votes needed to pass a jobs bill filled with tax breaks, unemployment benefits and aid packages to states.

"With the House having passed a jobs bill before the Memorial Day recess, Senate Democrats this week have proposed making changes to their bill, such as restoring $24 billion in Medicaid funds, money that was dropped from the House’s package. Additionally, in a move designed to court moderate support, the Senate bill now features a softer approach on taxing investments than does its counterpart legislation.

"... At stake are several programs that need funding legislation to stay alive. In addition to the Medicaid dollars for states, there are matching $23 billion initiatives to prevent education layoffs and to reimburse physicians that accept Medicare. Stabenow said she supports the so-called “Doc-Fix,” and added that she plans on putting forth an amendment to extend COBRA benefits for the unemployed. She also downplayed concerns that the bill, totaling over $100 billion in cost, would add to the nation’s already-massive deficit."

Medicaid support, tens of billions going to save public union jobs (teachers), Medicare reimbursement, extension of COBRA. Other than saving union jobs, how are the other programs going to create jobs and reduce federal deficit?

According to Sen. Debbie Stabenow (D-Mich.),

“The reality is that this legislation is part of turning things around and I would argue lowering the deficit,” she said. “When people are working, they are paying taxes…and that’s part of how you lower the deficit.”

(Who voted for this woman?)

According to CNN, this 'deficit reducing' job bill will add $50 billion to the federal deficit.

I happened to be looking at FY2010 Supplemental Appropriations Bill summary, and I noticed that funding for saving the pubic union jobs like teachers, police, firefighters was already included in the bill. Lucky for teachers, policemen, and firefighters. With this 'jobs bill', they'll get double.

Securing the government jobs is a matter of national security, I suppose.

I have a better idea on how to reduce deficit and create jobs. Well, not really reduce but more like "not add". DO NOTHING, GET OUT. Don't crowd the capital market with huge issuance of debt that sucks up available money only for the federal government to squander. Don't create more bureaucracy to manage ever-growing subsidy and wealth-transfer schemes, which actually help keep the poor remain poor.

You can read all about it elsewhere, MSM or alternative, so I wouldn't comment except for my subtitle.

And this perhaps: that Helen Thomas is of Lebanese descent. Here's one angry blogger's words: "It’s not hard to imagine that anyone with a Lebanese heritage, especially when they are 89-years old, has a problem (or two) with the government of Israel."

(Racial discrimination and age discrimination all in one sentence.)

People around the world, not just of Lebanese descent, seem to be having a problem or two or three with the government of Israel, in case people here haven't noticed. Even they have a problem or two.

According to Bloomberg, Jean-Claude Trichet, the ECB President and a Frenchman, says euro is stronger than Deutche Mark because:

1. Euro to USD is still higher than $1.1837, the close of the first trading day of Euro on January 4, 1999; and

2. It is still higher than the average Euro/USD since the introduction, which is $1.1842.

He also said that because euro is stronger than Deutsche Mark, it is healthy and sound, and it is here to stay.

From the end of 1988 to last week, according to Bloomberg, the basket of currencies that make up euro, which is dominated by Deutsche Mark, averaged $1.1945.

Mr. Trichet seems to have run out of good things to say about euro, so he is resorting to elementary school arithmetic.

I don't know exactly when Trichet said what he said, but euro was below $1.190 overnight. Since then it has trimmed the loss and at one point was as high as $1.19910. Right now, it's back down at $1.1951, barely above the Deutsche Mark benchmark.

Sunday, June 6, 2010

"Of the 25 leading City economists who took part in the Telegraph survey, 12 predicted that the euro would not survive in its current form this Parliamentary term, compared with eight who suspected it would. Five declared themselves undecided."

"Two of the eight experts who predicted that the currency would survive said it would do so only at the cost of seeing at least one of its members default on its sovereign debt. Andrew Lilico, chief economist at think tank Policy Exchange, said there was "nearly zero chance" of the euro surviving with its current membership, adding: "Greece will certainly default on its debts, and it is an open question whether Greece will experience some form of revolution or coup – I'd put the likelihood of that over the next five years as around one in four."

"Douglas McWilliams of the Centre for Economics and Business Research said the single currency "may not even survive the next week"" [He is the one who advised Greeks to leave the euro, go back to the Drachma and default on the euro debt.]

I suspect Germans (except for the German politicians) never wanted euro to begin with. They were proud of their Deutschemark. I also suspect Greeks (except for the Greek politicians) are not very eager to remain in euro (and possibly the EU) after this unhappy experience.

This is all interesting. Instead of centralization and integration as the EU planners had planned and patiently worked on for more than 60 years, nature seems to have exerted its force: Europe may be going the other way - decentralization and sovereignty.

About my coverage of Japan Earthquake of March 11

I am Japanese, and I not only read Japanese news sources for information on earthquake and the Fukushima Nuke Plant but also watch press conferences via the Internet when I can and summarize my findings, adding my observations.

About This Site

Well, this was, until March 11, 2011. Now it is taken over by the events in Japan, first earthquake and tsunami but quickly by the nuke reactor accident. It continues to be a one-person (me) blog, and I haven't even managed to update the sidebars after 5 months... Thanks for coming, spread the word.------------------This is an aggregator site of blogs coming out of SKF (double-short financials ETF) message board at Yahoo.

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